MTHEL131 Lecture Notes - Lecture 12: Liability Insurance, Vehicle Insurance, Home Insurance
12 Apr 2016
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Property and casualty insurance: insures general homes, p & c, home and auto, risk. Evaluated on: frequency, what is the likelihood, something can be very infrequent but the severity is high. House burning down or car geing smashed: severity. Is it high frequency or low frequency and what is the severity of that (high or low) Insure those scenarios that have a very low frequency of happening. Use insurance to manage risk that have a low likelihood of happening but if it happens, the costs are high. Event that will give rise to a loss. For a house, hazard could be neglect such as not checking ire alarm: liability. Person slips and falls while coming up friend"s driveway. If you have dog, can have liability insurance to cover if dog bites someone. If driver hits someone and other person is hurt, they can sue. Liability insurance is oten called third party insurance. The reason is that liability insurance protects others.
